Began as an 8-bit games software publisher in 1983 when Richard Branson widened the business interests of his Virgin empire. In 1988, Virgin bought Mastertronic and officially became Virgin Mastertronic the following year. Sega took over Mastertronic in 1992, prompting Virgin Games to be renamed to Virgin Interactive after retaining some Mastertronic coders following the takeover.

In July 1994, Blockbuster Entertainment in association with Viacom acquired 90% of Virgin. In 1998, Interplay acquired 43.9% of Virgin Interactive, which gave Interplay the distribution rights of Virgin products in North and South America and Virgin distribution rights of Interplay products in Europe. Later that year in November, Virgin became a part of Irvine Games Inc. and continued its UK operations. In October 1999 French publisher, Titus took a controlling interest in Virgin Interactive, after taking a majority interest in Interplay. In March 2002, Titus took complete ownership of Interplay and Virgin.

In July 2003, the Virgin Interactive label was officially laid to rest when it was renamed to Avalon Interactive. In January 2005, Titus filed for bankruptcy in France, but its international subsidiaries including Avalon Interactive (formerly Virgin) initially remained unaffected. Avalon continued to publish/distribute Titus and Interplay titles in Europe for PC and consoles despite the financial woes of its parent company. In February 2005, Avalon's doors closed for the last time and the company was liquidated.